What type of Will or Trust is best for you and your family? Many Carson City residents ask themselves this question often while planning their estate.
While there’s no one-size-fits-all answer to this question, it does help to know the difference between Wills vs. Trusts before making any decisions about which type of document is right for you.
What is a Trust?
A trust (also called an estate planning tool or instrument) is when an individual (the trustor) lets one person (the trustee) hold assets for the benefit of another individual.
The creator of the Trust, or trustor, sets the terms and conditions. Thus, the trustor can establish rules on how to use the property or assets in the Trust can use them.
There are many different types of trusts. One type is Living Trusts, which can be changed or changed back.
Another type is Testamentary Trusts, which a trustor cannot change without a court order.
The last type is an irrevocable life insurance trust, which cannot be changed back and does not need to go through court orders if it needs to change or stop paying out money.
What is a Will?
A Will is simply a legal document stating how individuals distribute their property after death. It helps to ensure that a Carson City resident’s wishes after death.
In Carson City, an individual can appoint someone to manage their property until it’s time to execute the Will.
This person will be called the executor of your estate and appear in the Will and other vital documents such as power-of-attorney for healthcare and durable power-of-attorney for finances.
When it comes down to it, Wills vs. Trusts are both estate planning tools that help individuals ensure they pass down assets and property after death.
However, Carson City residents should know some critical distinctions between the two. Let’s discuss the differences between Wills and Trusts.
What’s the Difference Between a Will and a Trust?
There are several differences between Wills and Trusts. The most fundamental difference is that Wills become effective when the person dies, while a trustor can enable a Trusts during their lifetime.
Wills are also subject to probate, a legal process where the deceased’s estate is settled and distributed. This process can often be expensive and time-consuming, taking many months or even years to complete.
Trusts don’t have a probate period because the Trust’s assets go to the trustee. Thus, it is usually easier to transfer assets and property to beneficiaries using a Trust rather than a Will.
Another critical distinction between Wills vs. Trusts relates to how each structure pays taxes. With a Will, the deceased’s estate pays any taxes on assets.
However, beneficiaries are typically responsible for any taxes owed on transferred assets with a Trust.
There are many other factors to consider when deciding between Wills vs. Trusts. If you need more assistance, please contact our Carson City law office.
Carson City residents can contact our office for more information or guidance in this process. We would be happy to help you make an informed decision about which type of document is right for you and your family!
Carson City Law Office offers Estate Planning services, including Wills, Trusts, and more. Contact us today at (775) 882-8032 to schedule your consultation.